(Xinhua)
Updated: 2008-02-20 11:17

QUITO - Ecuador's attorney general, Xavier Garaicoa, said Tuesday that he has asked for the cancellation of a contract with Brazil's state-run company Petrobras to extract crude oil in Ecuador.

Citing the "illegal" sale of Petrobras' holdings for Block 18 in the Palo Azul field in the Ecuadorian Amazon, Garaicoa said the Brazilian firm should have followed correct legal procedure before "declaring null and void" its contract with Petroecuador.

Petrobras had not informed the Ecuadorian government about the transferal of its 40 percent stake in projects at Block 18 to the Teikoku corporation, Garaicoa said.

It only declared an intention to do so after the deal was actually done, he said, adding that the transfer was made at stock exchanges in Buenos Aires and New York.

Apart from the oil field at Block 18, which has a daily output of 35,000 barrels, Petrobras also invested 180 million U.S. dollars in Block 31 of the Palo Azul field, which has a potential daily capacity of 40,000 barrels.

Ecuador launched similar procedures against the US company Occidental Petroleum in 2006 and deprived it of a contract for Block 15 in the same area. Daily output at Block 15 at that time was 100,000 barrels.

The US firm is currently pursuing Ecuador at the International Investment Disagreements Settlement Center, seeking compensation amounting to $1 billion.